BOSTON, MA -- (Marketwire) -- 06/15/09 -- Chief executives risk falling into the same trap
as those among their predecessors in the Great Depression who were too
quick to call the end of the downturn, according to the findings of a
report released today by The Boston Consulting Group (BCG).

In "Green Shoots, False Positives, and What Companies Can Learn from the
Great Depression," BCG found that, for all the talk of "green shoots"
today, most of the popular leading economic indicators show that the world
economy is still shrinking -- if at a slower rate than at the beginning of
the year.

It warns CEOs to guard against the kind of hasty optimism -- based on an
excessive reliance on one or two promising indicators -- that undermined
some companies during the Great Depression. In June 1930, after a stock
market rally that saw the S&P regain 60 percent of its lost value, Herbert
Hoover, the U.S. president, confidently announced that "the depression is
over."

In a study of 61 leading economic indicators in five of the world's largest
economies -- the United States, Germany, France, the United Kingdom, and
Japan -- BCG found that only five are in the "clearly positive" category.
Another 15 are in the "positive trend but too early to confirm" category.
The rest are ranked among either those showing some deceleration in the
rate of decline but no consistent upturn (36) or those continuing to show a
consistently negative trend (5).

Although this represents an improvement -- 37 of the 61 indicators were
ranked in the most negative category in December 2008 -- the report's
authors conclude that there are few signs that the global economy is back
on a positive trajectory. They warn that nearly half of all the indicators
showing signs of an upturn are driven by monetary policy. Of those
indicators that are not related to monetary policy initiatives, less than a
quarter have shown any positive sparks.

Daniel Stelter, global leader of BCG's Corporate Development practice and
coauthor of the report, said, "In recent conversations at companies the
world over, we have detected a change in the mindset of many executives.
Many seem to be adopting a more optimistic economic outlook. They tell us
that they see 'green shoots.' But although government intervention means
that we are unlikely to see the bank failures that contributed to the
paralysis of the 1930s, we should nonetheless learn from President Hoover's
hubris -- and take it as a warning to be cautious about any premature
celebrations of the upturn."

Major Risks Remain

BCG's report, part of its ongoing "Collateral Damage" series of papers on
the downturn, also points to a set of factors which suggest that, even when
the green shoots do start appearing, the recovery will be sluggish.

-- The empirical evidence is discouraging: similar recessions have lasted
seven quarters, on average

-- The deleveraging of the U.S. consumer has barely begun

-- Credit is not flowing yet

-- The banks have not been restored to health

-- The not-so-stressful "stress test": the U.S. government's stress test
was more a negotiation than a true assessment of banks' health

-- Governments do not have unlimited resources

David Rhodes, global leader of BCG's Financial Institutions practice and
coauthor of the report, said, "For us, the key issue is not the precise
timing of the upturn but the nature of the recovery. We expect this upturn
to be sluggish -- as with all upturns after a recession that is
synchronized around the globe and preceded by systemic financial stress.
And in a sluggish economy, trading conditions will be tougher, competitive
advantage more important, and broken business models exposed."

BCG's "Collateral Damage" Series

Based on its long history of helping companies survive and thrive during
global economic downturns, BCG created its "Collateral Damage" series,
which explores the "new realities" of a world in crisis. The series is
providing a big-picture analysis of the crisis as it evolves in different
regions, countries, and sectors. It offers senior executives practical
guidance for protecting their companies from the worst of the crisis and
preparing them for economic recovery.

Current titles in the series include:

-- Collateral Damage: What the Crisis in the Credit Markets Means for
Everyone Else

-- Collateral Damage, Part 2: Taking Robust Action in the Face of the
Growing Crisis

-- Collateral Damage, Part 3: Asia, Advantage, and Action

-- Collateral Damage, Part 4: Preparing for a Tough Year Ahead: The
Outlook, the Crisis in Perspective, and Lessons from the Early Movers

-- Collateral Damage, Part 5: Confronting the New Realities of a World in
Crisis

-- Collateral Damage, Part 6: Underestimating the Crisis

To receive a copy of the report or arrange an interview with one of the
authors, please contact Eric Gregoire at +1 617 850 3783 or
gregoire.eric@bcg.com.

About The Boston Consulting Group

The Boston Consulting Group (BCG) is a global management consulting firm
and the world's leading advisor on business strategy. We partner with
clients in all sectors and regions to identify their highest-value
opportunities, address their most critical challenges, and transform their
businesses. Our customized approach combines deep insight into the dynamics
of companies and markets with close collaboration at all levels of the
client organization. This ensures that our clients achieve sustainable
competitive advantage, build more capable organizations, and secure lasting
results. Founded in 1963, BCG is a private company with 66 offices in 38
countries. For more information, please visit www.bcg.com.

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